Survey: Health insurance costs surge in 2011

INDIANAPOLIS (AP) — The cost of employer-sponsored health insurance surged this year, snapping a trend toward moderate growth, but experts say these increases may slow again in 2012.

Annual premiums for family coverage climbed 9 percent and surpassed $15,000 for the first time, according to a report released Tuesday by the Kaiser Family Foundation and the Health Research and Educational Trust. Premiums for single coverage rose 8 percent compared to 2010.

That compares to increases last year of 3 and 5 percent for family and single coverage, respectively. The study shows that premiums for both family and single coverage have more than doubled since 2001, while worker wages have risen 34 percent.

Kaiser CEO Drew Altman said a number of factors may have played a role in this year's percentage jump. He noted that health care costs continue to rise, and insurer profits and the health care overhaul also have some impact.

The overhaul, which Congress passed last year, aims to eventually cover millions of uninsured people. Kaiser said initial provisions of the law contributed between 1 and 2 percentage points to this year's premium hikes, which is about what many insurance analysts and benefits experts expected.

Companies and workers split premiums for employer-sponsored coverage, the most common form of health insurance in the United States, and employers generally pick up 70 percent of the bill or more.

Businesses likely reacted to these cost increases by giving a smaller raise or no wage increase to their workers, said Helen Darling, CEO of the National Business Group on Health, a nonprofit organization that represents large employers on health care issues.

"(Workers) basically are giving their pay raise to the health system," said Darling, who was not involved with the Kaiser study. "It's really bad news."

The annual study was conducted earlier this year and includes results from more than 2,000 companies nationwide. It also indicates that many more families than previously believed have benefited from a popular provision in the overhaul that allows young adults to stay on a parent's health plan until they turn 26.

Kaiser asked employers how many people were added to their insurance plans because of this provision and estimated that 2.3 million young adults enrolled. Last week the government had reported that the number of uninsured young adults had dropped by nearly 1 million since the law took effect, a finding independently corroborated by Gallup.

The difference isn't necessarily a contradiction.

The Kaiser survey may have counted young adults who were covered by a more expensive policy and switched to their parent's plan to save money.

Many workers are about to receive notices from their employers regarding health insurance coverage for next year. Altman said he cannot say whether this year's increase represents a bad omen for 2012 or if it is just a one-year blip.

Insurers have been saying for months that health care use is growing more slowly this year, something industry observers pin on a sluggish economy. Altman and other benefits experts say that could lead to lower premium increases next year, since insurers base their rates in part on how often people use care.

Benefits consultant Mercer said earlier this month an employer survey it did shows that 2012 health insurance costs will rise by the smallest amount since 1997.

The Kaiser survey shows a steady increase in companies offering high-deductible plans, which come with lower premiums but make consumers pay more out of pocket for care. This insurance is often paired with health savings accounts that let people save pretax for medical expenses.

Altman said he expects that trend to continue growing as employers try to control premiums.

"This is the main tool that employers have in the toolbox right now, so we're going to see more and more high-deductible plans with bigger and bigger deductibles," he said.